The modern fleet manager has a lot to contend with, staying on top of the regular shifts in legislation and government policy that affect the management and running of vehicles – and the impact they have on the leasing market.
We take a look at the latest developments in the leasing market that you should be tracking.
Leasing in recruitment and retention
One of the most significant developments is the gradual shift away from fleets entering into contract hire and leasing agreements and towards employees taking on personal contracts as part of recruitment and retention packages.
The BVRLA’s latest quarterly leasing survey found that total car leasing fleet, which includes personal contract hire, hire purchase, contract purchase, personal contract purchase, employee car ownership schemes and salary sacrifice products, had expanded much faster than the business car fleet at 12% year-on-year. Personal contract hire contributed 49% of this growth.
John Pryor, chairman of ACFO, agreed, told us: “You have companies thinking about whether they need to offer a company car, with all the cost and tax implications, when instead they can give people cash as part of their benefits package or their salary enhancement, and they can go and lease a car on a similar basis as a company car.”
As concepts of personal mobility begin to replace traditional models of vehicle ownership, leasing companies are also starting to look at offering packages to fleet customers that enable them to be more flexible.
ACFO’s Pryor said: “Companies will look at integrating the fleet department that looks after the cars, a travel department that looks after air and rail, and a finance department that processes all the expenses. There’s an awful lot of information there and people need to start looking at total journey costs and mobility type.”
Martin Reeves, head of sales for leasing company Lombard Vehicle Solutions added: “These mobility schemes encourage people to really consider how they travel, whether a car is really appropriate and if they could travel in a different way.”
Brokers and leasing
Another big change in the leasing market is the greater participation of leasing brokers. The BVRLA reported that in the last quarter of 2016, its leasing broker members had 26% more vehicles on contract than they did in Q4 2015, while brokers signed 27% more new contracts in 2016 than they did in the previous year.
Peter Eldridge, a director of the Institute of Car Fleet Management (ICFM), noted: “The brokers have gained more interest from end users because of their ability to be more flexible with their approach: providing that which the end user requires, rather than what the leasing company believe they need.”
There are also a number of legislative changes that will have an effect on the fleet leasing environment.
Andy Hartley, commercial director at Lex Autolease, explains: “The new International Accounting Standard for lease accounting comes into effect from 1 January 2019, with the effect of bringing all leases greater than 12 months and $5,000 on to the balance sheet.
“This will impact businesses financial ratios and encourage some to review how they choose to fund vehicles and which is the best option to meet their strategic requirements.”
Another factor is the new Worldwide Harmonized Light Vehicles Test Procedures (WLTP), a new car and van emissions testing regime that will be introduced in the third quarter of 2017.
Hartley said: “This is likely to have a significant impact on quoted emissions levels and costs per mile for running vehicles tested under the new regime. However, in the long run, this is a much better regime for end users and will provide more confidence around emissions and running costs.”
What can fleet managers expect from a leasing partner today?
Fleets are looking for a leasing partner to future-proof and advise them about what they could be doing.
Hartley said: “A leasing partner should provide support in meeting wider vehicle-related needs such as fuel card provision, short-term hire and replacement vehicle services, accident management services, telematics, risk management tools such as driver training, P11D reporting and Motor Insurance Database reporting.
“They should also not only provide benchmarking data to enable the fleet manager to identify opportunities to improve how their fleet operates, but proactively suggest areas where the fleet manager can address the ongoing challenges of efficiently delivering upon their business’ fleet requirements.”
But the ICFM’s Eldridge suggests fleet managers look carefully at your own business, before deciding on a leasing partner.
“Fleet operators need to have a much better understanding, much more strategic knowledge and skill around what’s required of their fleet operation before they can actually address the requirements of their fleet leasing partner. And having addressed it to their fleet and leasing partner, what they can expect is to receive more palatable, more strategic solutions that actually fit their business.”
The leasing landscape will undoubtedly continue to shift in the coming years – with changes in both the type of leasing partners and the products they offer – so fleet managers will need to continue constantly reappraising their needs in a shifting business environment.